Why Buy Life Insurance?

May 2005

Why buy Life Insurance?

What is Life Assurance?

A plan that alleviates the effect of death, disability and old age. The only financial vehicle that pays a lump sum on death, disability, hospitalisation, critical illnesses. Provides peace of mind An effective tool for Personal Financial Planning

May 2005

Why buy Life Insurance?

Why Buy Life Insurance?

Provides financial security for the family. Acts as a tool for PROTECTION. Mitigate financial risks associated with Total /Partial Disability; Critical Illness; Hospitalisation Expenses; Old Age; Death. The tearing of the Joint Family fabric, makes insurance attractive for financial independence of the nuclear family. Is a SAVINGS vehicle. Enjoys Tax benefits (Front End Benefits of Section 80C, 80(D); Back end 10(10)D Maturity/Withdrawal Benefits are Tax Free)
May 2005 Why buy Life Insurance?

POSITIVES

Single

Start Family
Marriage

Buy House

Retirement

Education Better job

Planned Retirement Children Wealth Creation

18 NEGATIVES Premature Death Loss of job Unplanned Accident & Critical Illness Retirement Disability

Life Insurance mitigates the financial risks of Negative Events while boosting the prospects for Positive events of Life!
May 2005 Why buy Life Insurance?

Why Buy Life Insurance?

Safety of Capital Preservation Liquidity High Low Uncertain Good Average Average High Average Average High High Low HIGH AVERAGE Post tax returns Good Uncertain Low Low Uncertain Average GOOD

INSTRUMENT Provident Fund Shares Bonds Fixed Deposits Mutual Funds Postal Savings Schemes LIFE INSURANCE

Tax Efficiency Good Low Low Low Average Average HIGH

Risk Cover* None None None None None None YES

May 2005

Why buy Life Insurance?

What do people save for?

Buying house/asset creation Childrens education Childrens marriage Holidays Loan repayment Retirement

Threats to income/savings!
Premature Death Accidents Disability Old Age

May 2005

Why buy Life Insurance?

Money Machine
If you had a money Machine that provides you with a regular income to pay for your daily expensesWould you insure and maintain this valuable machine?

May 2005

Why buy Life Insurance?

Money Machine
For your family you are this machine. Do you have sufficient Life insurance coverage ?

May 2005

Why buy Life Insurance?

Advantages of Life Insurance: if we live

Encourages systematic saving eliminates personal selection of investments provides a safe investment is good property

May 2005

Why buy Life Insurance?

Advantages of Life Insurance If we Die!

Creates an immediate Estate, in a convenient way

Worth the Face Value Sum Assured

May 2005

Why buy Life Insurance?

Life Insurance Products essentially serve 3 different needs

Single Premium / UL Plans

Very importantly, life insurance makes sure you save and gives you financial strength to achieve your most important life goals. Term Plan
Accident Rider Disability Rider

3
Investment

Finally, life insurance is a safe, long-term investment

Money Back Plan

Saving Protection

Indicative Age Group : > 35 years

Whole Life/ Endowment Plan

Indicative Age Group : Upto 35 years

The first reason to have life insurance is to secure your familys financial future.

May 2005

Why buy Life Insurance?

Insurance Solutions for Age 25-35 25Major Events are Marriage/Family. Aspirations are High (Cars, Holidays, Consumer Durables). Recommended Insurance Products are:
Whole of life /Unit Linked Term products for covering assets purchased on loan. Regular premium payment to inculcate savings habits Risk takers can be recommended unit linked products

May 2005

Why buy Life Insurance?

Insurance Solutions for Ages 35-50 35Major Events are Children, Childrens Education, Childrens Wedding Aspirations are High. Recommended Insurance Products are:
Unit Linked/Childrens Plan for specific planned events like childrens education, childrens marriage, travel, etc. Endowment/Unit Linked for aspirations like Car, House etc. Start retirement planning with deferred annuity products.

May 2005

Why buy Life Insurance?

Insurance Solutions for Age 50-60 50Major Event is Retirement Aspirations are Low (Lifestyle Maintenance). Recommended Insurance Products are:
Retirement planning with deferred annuity products. Immediate Annuities Endowment policies to build up capital to purchase annuities

May 2005

Why buy Life Insurance?

How much of Life Insurance to buy?

Proceeds from Life Insurance should be sufficient to take care of the following without requiring the family to liquidate any immovable asset:
Continuation of existing lifestyle Take care of all future expenses including Children's Education and Marriage Repayment of any outstanding loans

Ideally, the regular savings through life insurance should also be a part of the overall retirement plan of the individual.
The rule of thumb is to have life insurance coverage of 8-10 times the gross annual income
May 2005 Why buy Life Insurance?

How much of Life Insurance to buy?

Most insurance companies provide a life insurance need assessment calculator that works out insurance requirements based on the present value of future liabilities and current assets. It is advisable to calculate your exact requirement with such a calculator. Life Insurance requirement changes with time, depending on increasing or decreasing liabilities. You must keep checking your need every 4-5 years.

May 2005

Why buy Life Insurance?

Everyone pays for Life Insurance. either you pay for it now or your family pays for it later!!!! Thank You

May 2005

Why buy Life Insurance?